March 30, 2009

A week in Barbados

... is highly recommended to all (who can afford it--the island is frightfully expensive). The economic success of the island immediately raises the question of why economic performance in the Caribbean has been so uneven--ranging all the way from the disaster that is Haiti (the earliest country to gain its independence, by the way) to the achievements of Barbados. Eric Williams' fascinating history of the region is a must-read. Williams himself is a fascinating man, having acted as the long-term prime minister of Trinidad and Tobabo as well as being a distinguished historian (and the originator of the thesis that the Industrial Revolution was spawned by the riches earned through the colonial trade). A few recent papers (see this and this) scratch the surface in terms of explaining the differences (the bequest of history and domestic policy choices made at home both make a huge difference), but there is much, much more to be done.

This is the first time I gave a talk preceded by the playing of national anthems. Here is the powerpoint of my presentation: it is what my One Economics, Many Recipes book would look like if I were to write it today.

Come to the Bahamas next time--we are closer, less expensive and give a better, all around tourist experience.

I found the second paper from the IMF, to be a little more representative of the issues from root origin than the first. Geography and national fragmentation as well as migration due to geography, played a significant role in development.

But, the first does yield some particular nationalist points. And, to some extent, minimalizes the extent that land-inclusive Guyana in the IMF paper, with their contrast of Barbados and Jamaica, both island nations, bore some more fruitful relevance when compared.

I think the twix (sounded fitting a term) between both papers and their findings is 1. the time of independence and 2. the size of the population and, 3. the size of the industrial sectors and their contribution to development and GDP growth.

To put it more mildy; If Guyana had a control over it's migration; social cohesion; a more favourable period in which they came to independence and; even a quarter of the control over major industrial industries in their country, even in light that they have very few compared to Jamaica, they would have been in a better position.

Moving forward, the globalized service economy that was burgeoning since the 1970's, made Barbados a beneficiary of the service based economic model and now, the knowledge based economy, built on service oriented specialization.

If Barbados wanted to make a serious run at the services market, they would invest in health care and education services. They have just as much capacity as does Cuba, to make that a very strong reality.

The Neue Zuercher Zeitung (NZZ) quoted Swiss officials as saying they might block progress in cooperation with China, India and other emerging countries in protest against being placed on the OECD's "grey list".

On Wednesday Switzerland blocked a payment of 136,000 euros (180,000 dollars) to the OECD, a 30-member organisation of major industrialised countries.

Officials were now considering delaying their membership subscription of 10 million Swiss francs (8.65 million dollars) or blocking the 2011 reelection of OECD secretary general Angel Gurria, the paper reported.

The federal finance ministry could not be reached for comment.

But Interior Minister Pascal Couchepin told Sonntag, another Sunday paper, that it was not up to the OECD to act as a "restaurant guide" on the issue.

On April 2, the Organisation for Economic Cooperation and Development (OECD) released a "grey list" of countries that "have committed to the internationally agreed tax standard, but have not yet substantially implemented" the measures.

Swiss politicians were furious to find their country on the list even though it had announced measures to relax its tax secrecy laws.

On Thursday Gurria said that the first contacts with Switzerland on tax issues had taken place in October 2008.

"The OECD acted in good faith and duly shared its information with the representatives of the countries concerned," he said in a letter to the president of the Swiss confederation.

Switzerland had so far "not signed a single agreement on the exchange of tax information in conformity with OECD standards", he added.

Just five UK companies have made it on to a list of the world's most ethical corporations, published by an American research institute today.

Marks & Spencer, the retailer, HSBC, the London-listed banking giant, Vodafone, the telecoms group and AstraZeneca, the drugs maker and the emerging markets bank Standard Chartered are included in a list of 99 "good corporate citizens", compiled by the Ethisphere Institute.

The Anglo-Dutch consumer goods group Unilever and Thomson Reuters, the newly merged Anglo-American media group also make the institute's cut this year.

The Ethisphere Institute is a New York based think tank. It first began publishing its list three years ago.

In December, it published a list of the top 100 most influential people in business. It included Ken Livingstone, the former Mayor of London who won plaudits for awarding contracts to companies only if they met corporate social responsibility standards.

Neelie Kroes, the European competition commissioner, was also on Ethisphere's list of ethical movers and shakers, after she fined Microsoft, the computer maker, $1.35 billion for breaching monopoly rules by installing its web browser on all of its machines.

General Motors Corp. is recalling 1.5 million vehicles because of potential engine
fires.

GM says there have been no reports of any fires or injuries. Some of the recalled vehicles are no longer in production. The recall includes the 1998-1999 Oldsmobile Intrigue, the 1997-2003 Pontiac Grand Prix, 1997-2003 Buick Regal, and the 1998-2003 Chevrolet Lumina, Monte Carlo and Impala.

The recall involves vehicles with a 3.8-liter V6 engine. The government says drops of oil could fall into the exhaust system and cause a fire in the engine.

GM spokesman Kerry Christopher says it was a precautionary measure for consumers.

The US Securities and Exchange Commission is reviewing if Bank of America Corp violated federal securities law by failing to disclose to
shareholders Merrill Lynch's plan to pay $3.62 billion in bonuses before they voted for the merger of the banks, the Financial Times said.

Mary Schapiro, chairman of the SEC, wrote in a letter to a Democratic congressman that the regulator was "carefully reviewing the Bank of America disclosure" and had not yet expressed a view on whether the bonus plan should have been revealed, the paper said.

Last week, Congressman Dennis Kucinich said in a letter to the SEC that there were "significant questions" surrounding Bank of America's failure to disclose bonus details before shareholders voted on the bank's acquisition of Merrill.

"Where the SEC believes that there has been an omission of material facts necessary in order to make the statements not misleading, we will carry out our enforcement responsibilities with vigor and vigilance," the paper quoted Schapiro's letter.

The SEC did not immediately reply to a Reuters e-mail seeking comment that was sent outside of normal business hours.

In a statement last week, Bank of America had said "we believe we made the appropriate and legal disclosures in the materials available to shareholders" before the meeting.

The Obama administration is expected to name Fannie Mae Chief Executive Herb Allison to head the U.S. government's $700 billion
financial rescue program, a source familiar with the matter said on Monday.

The announcement is expected "in coming days," the source said, adding that Michael Williams, Fannie Mae's chief operating officer, is expected to be named as Allison's successor.

The Wall Street Journal first reported on its website that U.S. President Barack Obama could announce his intention to nominate Allison as assistant secretary for the office of financial stability as early as this week.

Allison's name has been on the short list from the beginning as the government looked for someone to run the Troubled Asset Relief Program, the Journal said, citing people familiar with the matter.

Several factors complicated his selection, including the need to replace him at Fannie, the paper reported, citing sources.

Allison, a veteran banker and former president of Merrill Lynch, led the TIAA-Cref pension fund before being appointed Fannie Mae CEO in September.

China's economy is showing signs of a nascent recovery, but even officials who want to boost public confidence warn a rebound faces
risks from the global crisis and is not yet certain.

Imports of oil, iron ore and other raw materials rose in March, reflecting the impact of Beijing's multibillion-dollar stimulus spending on industry. Home and auto sales are up, suggesting consumers might be more willing to spend.

A rebound for China, the world's third-largest economy, could help other countries by boosting demand for their exports, though analysts say China alone cannot propel the global economy out of its worst slump since the 1930s.

Federal Reserve chief Ben Bernanke said on Tuesday that there were initial signs that the prolonged US recession may be easing but
warned of the need for financial stability for full recovery.

He said he saw "tentative signs that the sharp decline in economic activity may be slowing," citing data on home sales, homebuilding and consumer spending, including sales of new motor vehicles.

While a leveling out of economic activity was the first step toward recovery, he said, "To be sure, we will not have a sustainable recovery without a stabilization of our financial system and credit markets.

"We are making progress on that front as well, and the Federal Reserve is committed to working to restore financial stability as a necessary step toward full economic recovery," he said in a speech at the Morehouse College in Atlanta, Georgia.

Major companies in the Silicon Valley are suffering the biggest slump since the dot-com bust, further proving that the leading
technology hub is not immune from the effects of a global economic meltdown, a new report has said.

According to rankings compiled by the San Jose Mercury News, total market capitalisation of Silicon Valley's 150 biggest public companies plunged 32 per cent to about $850 billion for the past 12 months ending March 31, the worst decline since 2002.

The newspaper's annual Silicon Valley 150 list ranks public companies headquartered in the region on the basis of their worldwide revenues for the most recent available four quarters.

"The mission of our group is to improve corporate behavior," said Alex Brigham, executive director of the Ethisphere Institute, an international think-tank based in New York dedicated to the advancement of best practices in business ethics, corporate social responsibility, anti-corruption and sustainability.

The companies are chosen against their peers within their industry, as each industry operates under different circumstances, Brigham said.

American Airlines will add the first of 76 new Boeing jets to its fleet this week in a move that the carrier hopes will cut
fuel and maintenance costs.

The Boeing 737-800 aircraft will replace about one-fourth of American's current aging fleet of McDonnell Douglas MD-80 series jets, which have been the subject of several maintenance problems in the past year.

American took delivery of the first two planes late last month, held a media open house Monday, and planned to put them into service carrying passengers Tuesday in Chicago.

The planes are the newest generation of Boeing's workhorse 737 series. American already has 77 Boeing 737-800s it bought nearly a decade ago. They list for $72.5 million to $81 million. American officials said they paid less than sticker price, but wouldn't say how much.

``This is a strategic investment for our future,'' said pilot Jim Kaiser as he stood in the aisle of a jet that still had that new-plane smell of leather, plastic and carpeting.

Shares of General Motors Corp plunged 17 per cent on Monday after a report that the US Treasury is directing the automaker to lay the
groundwork for a bankruptcy filing by June 1.

GM, which is operating under $13.4 billion of emergency government loans, has until June 1 to win sweeping concessions from bondholders and the United Auto Workers union. The Obama administration has warned that the alternative would be bankruptcy.

A newspaper said the government's goal was to prepare for a fast "surgical" bankruptcy, quoting people who had been briefed on the GM plans.

Sources familiar with the situation told Reuters that GM was in "intense" and "earnest" preparations for a possible bankruptcy filing.

Bailed out US banks including Citibank, headed by Indian American chief executive Vikram Pandit, are facing a probe over increase in
rates and fees, a media report said Monday.

The Congressional Oversight Panel, the body named by the Congress to oversee the federal bailout under the Troubled Asset Relief Programme (TARP), is working on a report examining instances of potentially inappropriate lending by banks that got government capital, according to the Wall Street Journal.

"The people who are subsidising the activities of the banks through their tax dollars are the same people who are furnishing the high profits through consumer lending," Elizabeth Warren, chairwoman of the Congressional Oversight Panel told the Journal in an interview.

More than three months into a medical leave from Apple Inc, Chief Executive Steve Jobs remains closely involved in key aspects of
Steve Jobs

running the company, the Wall Street Journal reported on Saturday, citing people familiar with the matter.

Chief Operating Officer Tim Cook runs the day-to-day operations, but Jobs has continued to work on the company's most important strategies and products from home, the newspaper said in a story on its website.

He regularly reviews products and product plans, and was particularly involved in the user interface of the new iPhone operating system that Apple unveiled last month, the Journal said.

Jobs, an Apple co-founder who is considered the company's creative leader, is also involved in the development of future projects, the paper said, citing people with knowledge of the company's strategy.

Jobs, 54, who was treated in 2004 for a rare form of pancreatic cancer, took a medical leave in early January, saying he would return in June and would remain involved in "major strategic decisions while I am out".

But he has made no public appearances or statements since then, and it has been unclear just how involved he continued to be, the Journal said.

Switzerland is considering further measures against the OECD in the row over how much the country is doing to reform its policy on tax
havens, media reports said on Sunday.

The Neue Zuercher Zeitung (NZZ) quoted Swiss officials as saying they might block progress in cooperation with China, India and other emerging countries in protest against being placed on the OECD's "grey list".

On Wednesday Switzerland blocked a payment of 136,000 euros (180,000 dollars) to the OECD, a 30-member organisation of major industrialised countries.

Officials were now considering delaying their membership subscription of 10 million Swiss francs (8.65 million dollars) or blocking the 2011 reelection of OECD secretary general Angel Gurria, the paper reported.

The federal finance ministry could not be reached for comment.

But Interior Minister Pascal Couchepin told Sonntag, another Sunday paper, that it was not up to the OECD to act as a "restaurant guide" on the issue.

Anyone searching for a sepia-tinted rugby photo, antique cuff links or a precious piece of art deco jewelry at the Antiquarius Center had
better come fast.

Blink and it will be gone. The dozens of diverse, very British shops on the chic King's Road in Chelsea face eviction to make way for Anthropologie, an American-based chain planning an American fashion emporium, much like the stores it operates in St. Louis and Miami Beach.

"There used to be three antique centers in Chelsea, soon there will be none," said Sue Norman, who has sold hand-painted 19th-Century china here since 1972. "I think it's very sad. It seems the younger generation much prefers American-style things to English style."

The pending loss of the Antiquarius Center is part of the wider, inexorable Americanization of Britain, where rich veins of eccentricity are being snipped as American customs catch on.

Remember the dapper English gentleman? Shoes polished and dressed to the nines? He's often found in blue jeans, an open shirt, and sneakers these days.

And those bad English teeth, neglected for years? Tooth-whitening is catching on, a l'americaine. There has been a surge of cosmetic surgeries as more women — and teenagers — embrace the Hollywood ideal and have their breasts enhanced and wrinkles Botoxed. Pillbox psychiatry is catching on too, with record numbers gobbling antidepressants, and Britons are turning to fast food at such an alarming pace that obesity among young people is reaching epidemic proportions.

The East Asia Summit, which collapsed in chaos on Saturday, was meant to provide an opportunity for leaders of half the
world's population to discuss responses to the global financial crisis.

The Asian leaders were also scheduled to sign an investment pact with China and put the final touches on a regional currency pool to help member nations fend off speculative attacks and capital flight.

"The summit has been delayed and can be reopened, but we lost a good opportunity" to discuss financial cooperation and combat protectionism, said Zhou Fangye, of the Institute of Asia-Pacific Studies at the Chinese Academy of Social Sciences.

By STEVEN GJERSTAD and VERNON L. SMITH Bubbles have been frequent in economic history, and they occur in the laboratories of experimental economics under conditions which -- when first studied in the
Britain may have to go to the IMF for a huge financial bailout, the George Soros, the influential investor, warns today The man who made $1 billion on Black Wednesday in 1992 told The Times that Britain was particularly vulnerable to the economic crisis. Mr Soros - speaking days after an auction of government bonds failed for the first time in 14 years, ringing alarm bells about..

Taco Bell is offering nachos for as cheap as 79 cents. A buck and change can get you a double cheeseburger at McDonald's or a Whopper Jr. (the plural, according to an old Onion bit poking fun at William Safire, is Whoppers Jr.) at Burger King. And if you're more flush with cash, five dollars allows you to wolf down a foot-long hero at Subway.

Taking steps to help expand the marketplace and improve the consumer experience for digital entertainment, Microsoft Corp. today announced that PacketVideo Corp. will include support for Microsoft PlayReady technology in its CORE multimedia platform, significantly broadening PlayReady's reach to a range of mobile device platforms. Microsoft also announced the availability of the PlayReady Service Provider Program, in addition to announcing a range of content and technology companies that join the more than 50 companies that have selected Microsoft PlayReady technology to power products and services to deliver mobile and in-home entertainment content. PlayReady is a content access technology that enables content owners and service providers to deliver virtually any type of digital content, using a wide range of business models, from on-demand streaming video and subscription to rental or download-to-own. PlayReady also provides significant improvements in ease of use for consumers looking to access, manage and sync protected content with devices.

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